£2 billion of Lotto cash is sitting unused in the bank

A staggering £2 billion of Lotto cash is sitting unused in the bank, a situation charity chiefs have called 'immoral'.

A scathing report by MPs accused lottery chiefs of being 'too timid' in giving out grants - thus depriving good causes of desperately needed cash.

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Each lottery ticket sold raises 28p for good causes but the powerful all-party Public Accounts Committee (PAC) discovered a £2.4 billion balance lay idle in official bank accounts last year - far in excess of the total grants given out in an entire year.

The parliamentary report said proceeds from the sale of lottery tickets - more than £17 billion since the lottery was launched in 1994 - were being distributed too slowly to good causes.

The Commons committee urged the Government to 'get a grip' on the problem by setting strict targets for reducing the balances in the National Lottery Distribution Fund.

If lottery distributors were less cautious almost £500 million could have been released immediately, said the MPs.

"There is no shortage of high quality projects to fund but the enormous sum of £2.4 billion was stuck in limbo in May of this year - in part because the distributors were too timid to apply their own policies for committing funds."

The committee said that two thirds of projects applying for funding were being turned down because the Lottery distributors were not prepared to commit more money.

Each year about 28,000 projects receive funding but a further 56,000 are turned away because they fail to meet the criteria or the fund has run out of cash.

The lottery operators have already been urged by the government to halve their balances. But the report concluded that progress in reducing balances was too slow.

It found that a target to halve them by 2004 was missed by a 'wide margin' and the balances of some distributors of lottery funds had actually increased.

Lottery chiefs argue that the huge amount of cash sitting in the bank is accounted for - but not yet distributed.

They say every penny is committed to projects, with many projects that recieve funds funds taking several years to complete.

With money often released in stages, it requires them to hold the balance at the bank rather than risk the money on other ventures.

But the Public Accounts Committee report said money was often held in the fund in case it was needed for future, unidentified projects - despite the fact that balances were constantly replenished through ticket sales each week.

Charity bosses were angered by news of the billions sitting in Lottery bank accounts. Speaking after the report was published, Derek Phillips, founding-president of the Demelza House Children's Hospice in Kent - which had been turned down repeatedly for funding, said: "This is immoral.

"I am appalled that so much moneycan sit there unused, when causes like children's hospices don't get anything from the state - even though they save the NHS millions of pounds a year.

"If a charity built up huge cash reserves like this they would quite rightly come under pressure to do something about it. It is time for the government to look at the rules on grant-giving."